W.W. Grainger Inc. President James T. Ryan detailed the distributor’s product expansion plans recently in a presentation to analysts at the William Blair & Company’s 26th Annual Growth Stock Conference in Chicago. Ryan said Grainger plans to double the size of its catalog in the next few years.
Already this year, Grainger has increased the size of its catalog by 40 percent adding 39,000 new products. Grainger’s 2006 catalog features 115,000 products, compared with 82,400 last year.
Grainger plans to add 20 percent more products in 2007, and 20 percent more again in 2008. ‘Product expansion is the key driver to our growth,’ Ryan says. ‘We will not get beat on the breadth or quality of our product line.’
The most significant product addition this year was fasteners. The company carries 31,000 compared with the 3,500 it carried before. It also has added more in hand tools, electrical, and material handling equipment.
‘You can go to specialists to buy these products,’ Ryan says. ‘But in reality, it is more cost-efficient to go to one buyer.’
Ryan says the product expansion is expected to add $65 million to $80 million in incremental sales this year.
Ryan also discussed Grainger’s market expansion program detailing the strides it has made in the Seattle market as an example. There Grainger has added two new branches, relocated one for better visibility, expanded five, and added a Grainger express. In addition, the company has added sale representatives to the market. As a result, Seattle sales grew 16% in 2004 and 18% in 2005.
Grainger expects $245-$275 million in incremental sales overall from the market expansion program in the U.S. in 2006.
Ryan also described opportunities beyond the U.S. He included some of the ways the company intends to improve the performance of its business in Canada, Acklands-Grainger Inc. In April, Grainger promoted Y.C. Chen to Group President responsible for Canada, Mexico and Puerto Rico. More recently, Douglas J. Harrison, who served as President of Acklands-Grainger, resigned. Y.C. Chen is now also serving as the interim President of Acklands-Grainger.
Grainger plans to continue growing its Lab Safety Supply business via acquisition. It has recently opened three new Grainger branches in Mexico and expanded its sales force. In China, it will open a combination distribution center/branch in Shanghai. ‘We’re going to take a measured approach to that market,’ Ryan says.
A webcast of Ryan’s presentation can be found on Grainger’s Web site.
Grainger, with 2005 sales of $5.5 billion, is a broad line supplier of facilities maintenance products serving businesses and institutions throughout North America through a network including nearly 600 branches, 18 distribution centers and multiple Web sites.
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